G.R. No. L-46658 May 13, 1991
PHILIPPINE NATIONAL BANK, petitioner, vs. HON. GREGORIO G. PINEDA, in his capacity as Presiding Judge of the Court of First Instance of Rizal, Branch XXI and TAYABAS CEMENT COMPANY, INC., respondents.
The Chief Legal Counsel for petitioner. Ortille Law Office for private respondent.
TAYABAS CEMENT COMPANY
PHILIPPINE NATIONAL BANK, petitioner, vs. HON. GREGORIO G. PINEDA, in his capacity as Presiding Judge of the Court of First Instance of Rizal, Branch XXI and TAYABAS CEMENT COMPANY, INC., respondents.
The Chief Legal Counsel for petitioner. Ortille Law Office for private respondent.
TAYABAS CEMENT COMPANY
TOYO MENKA KAISHA
FERNAN, C.J.:
FACTS:
The Arroyo Spouses obtained a loan of P580K from PNB to purchase 60% of the subscribed capital stock, and thereby acquire the controlling interest of Tayabas Cement Company, Inc. (TCC). As security for said loan, the spouses executed a real estate mortgage over a parcel of land known as the La Vista property.
TCC filed with petitioner bank an application and agreement for the establishment of an 8 year deferred letter of credit (L/C) for $7M in favor of Toyo Menka Kaisha to cover the importation of a cement plant machinery and equipment. Upon approval of the application and opening of an L/C by PNB in favor of Toyo Menka Kaisha for the account of TCC, the Arroyo spouses executed a surety agreement. The imported cement plant machinery and equipment arrived from Japan and were released to TCC under a trust receipt agreement. Subsequently, Toyo Menka Kaisha made the corresponding drawings against the L/C as scheduled.
TCC, however, failed to remit and/or pay the corresponding amount covered by the drawings. Thus, pursuant to the trust receipt agreement, PNB notified TCC of its intention to repossess the imported machinery and equipment for failure of TCC to settle its obligations under the L/C. PNB foreclosed the real estate mortgages executed by the spouses Arroyo in TCC’s favor.
PNB contends that the sale of La Vista was made to satisfy not only the amount owed by the spouses on their personal loan but also the amount of expenses owed by said spouses as sureties of TCC. The Arroyos oppose the foreclosure, contending primarily that repossession of the imported machinery and equipment by PNB amounted to dacion en pago that extinguished their obligation as surety to TCC.
Thus, in May, 1976, PNB filed with the Court of First Instance of Quezon City, Branch V a petition for mandamus 9 against said Diana Dungca in her capacity as City Sheriff of Quezon City to compel her to proceed with the foreclosure sale of the mortgaged properties covered by TCT No. 55323 in order to satisfy both the personal obligation of the spouses Arroyo as well as their liabilities as sureties of TCC.
DECISION OF LOWER COURTS:
* CFI - Quezon: petition was granted and Dungca was directed to proceed with the foreclosure sale of the mortgaged properties covered by TCT No. 55323 pursuant to Act No. 3135 and to issue the corresponding Sheriff's Certificate of Sale.
Before the decision could attain finality, TCC filed on September 14, 1976 before the Court of First Instance of Rizal, Pasig, Branch XXI a complaint 12 against PNB, Dungca, and the Provincial Sheriff of Negros Occidental and Ex-Officio Sheriff of Bacolod City seeking, inter alia, the issuance of a writ of preliminary injunction to restrain the foreclosure of the mortgages over the La Vista property and Hacienda Bacon as well as a declaration that its obligation with PNB had been fully paid by
FERNAN, C.J.:
FACTS:
The Arroyo Spouses obtained a loan of P580K from PNB to purchase 60% of the subscribed capital stock, and thereby acquire the controlling interest of Tayabas Cement Company, Inc. (TCC). As security for said loan, the spouses executed a real estate mortgage over a parcel of land known as the La Vista property.
TCC filed with petitioner bank an application and agreement for the establishment of an 8 year deferred letter of credit (L/C) for $7M in favor of Toyo Menka Kaisha to cover the importation of a cement plant machinery and equipment. Upon approval of the application and opening of an L/C by PNB in favor of Toyo Menka Kaisha for the account of TCC, the Arroyo spouses executed a surety agreement. The imported cement plant machinery and equipment arrived from Japan and were released to TCC under a trust receipt agreement. Subsequently, Toyo Menka Kaisha made the corresponding drawings against the L/C as scheduled.
TCC, however, failed to remit and/or pay the corresponding amount covered by the drawings. Thus, pursuant to the trust receipt agreement, PNB notified TCC of its intention to repossess the imported machinery and equipment for failure of TCC to settle its obligations under the L/C. PNB foreclosed the real estate mortgages executed by the spouses Arroyo in TCC’s favor.
PNB contends that the sale of La Vista was made to satisfy not only the amount owed by the spouses on their personal loan but also the amount of expenses owed by said spouses as sureties of TCC. The Arroyos oppose the foreclosure, contending primarily that repossession of the imported machinery and equipment by PNB amounted to dacion en pago that extinguished their obligation as surety to TCC.
Thus, in May, 1976, PNB filed with the Court of First Instance of Quezon City, Branch V a petition for mandamus 9 against said Diana Dungca in her capacity as City Sheriff of Quezon City to compel her to proceed with the foreclosure sale of the mortgaged properties covered by TCT No. 55323 in order to satisfy both the personal obligation of the spouses Arroyo as well as their liabilities as sureties of TCC.
DECISION OF LOWER COURTS:
* CFI - Quezon: petition was granted and Dungca was directed to proceed with the foreclosure sale of the mortgaged properties covered by TCT No. 55323 pursuant to Act No. 3135 and to issue the corresponding Sheriff's Certificate of Sale.
Before the decision could attain finality, TCC filed on September 14, 1976 before the Court of First Instance of Rizal, Pasig, Branch XXI a complaint 12 against PNB, Dungca, and the Provincial Sheriff of Negros Occidental and Ex-Officio Sheriff of Bacolod City seeking, inter alia, the issuance of a writ of preliminary injunction to restrain the foreclosure of the mortgages over the La Vista property and Hacienda Bacon as well as a declaration that its obligation with PNB had been fully paid by
reason of the latter's repossession of the imported machinery and equipment.
* Court of First Instance of Rizal, Branch XXI : respectively granting private respondent Tayabas Cement Company, Inc.'s application for a writ of preliminary injunction to enjoin the foreclosure sale of certain properties in Quezon City and Negros Occidental and denying petitioner's motion for reconsideration thereof.
* CFI - Rizal (motion for reconsideration by PNB): denied.
Petition for certiorari.
ISSUE:
WON the repossession of the machinery was tantamount to a dacion en pago that absolved Arroyo spouses as surety?
Held:
1. NO.
There was no dacion en pago. Dation in payment takes place when property is alienated to the creditor in satisfaction of a debt in money and the same is governed by sales. Dation in payment is the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the obligation. The repossession of the machinery and equipment in question was merely to secure the payment of TCC’s loan obligation and not for the purpose of transferring ownership thereof to PNB in satisfaction of said loan. Thus, no dacion en pago was ever accomplished.
PNB took possession of the imported cement plant machinery and equipment pursuant to the trust receipt agreement executed by and between PNB and TCC giving the former the unqualified right to the possession and disposal of all property shipped under the Letter of Credit until such time as all the liabilities and obligations under said letter had been discharged. PNB’s possession of the subject machinery and equipment being precisely as a form of security for the advances given to TCC under the Letter of Credit, said possession by itself cannot be considered payment of the loan secured thereby. Payment would legally result only after PNB had foreclosed on said securities, sold the same and applied the proceeds thereof to TCC’s loan obligation. Mere possession does not amount to foreclosure for foreclosure denotes the procedure adopted by the mortgagee to terminate the rights of the mortgagor on the property and includes the sale itself.
The transfer of ownership to extinguish a pre-existing obligation is the essence in dation in payment, therefore it is not a consensual contract, but a real contract and novates the original debt relationship into a consummated sale.
2. DOCTRINE OF NON-INTERFERENCE
Another reason for striking down the writ of preliminary injunction complained of is that it interfered with the order of a co-equal and coordinate court. Since Branch V of the CFI of Rizal had already acquired jurisdiction over the question of foreclosure of
* Court of First Instance of Rizal, Branch XXI : respectively granting private respondent Tayabas Cement Company, Inc.'s application for a writ of preliminary injunction to enjoin the foreclosure sale of certain properties in Quezon City and Negros Occidental and denying petitioner's motion for reconsideration thereof.
* CFI - Rizal (motion for reconsideration by PNB): denied.
Petition for certiorari.
ISSUE:
WON the repossession of the machinery was tantamount to a dacion en pago that absolved Arroyo spouses as surety?
Held:
1. NO.
There was no dacion en pago. Dation in payment takes place when property is alienated to the creditor in satisfaction of a debt in money and the same is governed by sales. Dation in payment is the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the obligation. The repossession of the machinery and equipment in question was merely to secure the payment of TCC’s loan obligation and not for the purpose of transferring ownership thereof to PNB in satisfaction of said loan. Thus, no dacion en pago was ever accomplished.
PNB took possession of the imported cement plant machinery and equipment pursuant to the trust receipt agreement executed by and between PNB and TCC giving the former the unqualified right to the possession and disposal of all property shipped under the Letter of Credit until such time as all the liabilities and obligations under said letter had been discharged. PNB’s possession of the subject machinery and equipment being precisely as a form of security for the advances given to TCC under the Letter of Credit, said possession by itself cannot be considered payment of the loan secured thereby. Payment would legally result only after PNB had foreclosed on said securities, sold the same and applied the proceeds thereof to TCC’s loan obligation. Mere possession does not amount to foreclosure for foreclosure denotes the procedure adopted by the mortgagee to terminate the rights of the mortgagor on the property and includes the sale itself.
The transfer of ownership to extinguish a pre-existing obligation is the essence in dation in payment, therefore it is not a consensual contract, but a real contract and novates the original debt relationship into a consummated sale.
2. DOCTRINE OF NON-INTERFERENCE
Another reason for striking down the writ of preliminary injunction complained of is that it interfered with the order of a co-equal and coordinate court. Since Branch V of the CFI of Rizal had already acquired jurisdiction over the question of foreclosure of
mortgage over the La Vista property and rendered judgment in relation thereto, then it
retained jurisdiction to the exclusion of all other coordinate courts over its judgment,
including all incidents relative to the control and conduct of its ministerial officers,
namely the sheriff thereof. The foreclosure sale having been ordered by Branch V of
the CFI of Rizal, TCC should not have filed injunction proceedings with Branch XXI
of the same CFI, but instead should have first sought relief by proper motion and
application from the former court which had exclusive jurisdiction over the
foreclosure proceeding.
This doctrine of non-interference is premised on the principle that a judgment of a court of competent jurisdiction may not be opened, modified or vacated by any court of concurrent jurisdiction.
This doctrine of non-interference is premised on the principle that a judgment of a court of competent jurisdiction may not be opened, modified or vacated by any court of concurrent jurisdiction.
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